Loan Modifications May Lead to Foreclosure
MSNBC is reporting that banks are not living up to their part of the deal when modifying loans for consumers. The article highlights the plight of William and Esperanza Casco, who were making enough money to stay current on their mortgage. JPMorgan Chase & Co. offered a plan that reduced their payments, and they figured they could use the extra cash, so they signed up. The Cascos say they never missed a subsequent payment, so they were horrified when the bank decided that the smaller payments weren't enough and foreclosed on their modest Long Beach home. The Cascos never missed a payment in 17 years.
Many struggling homeowners feel that they are getting little help from the part of the government's $700 billion Wall Street rescue that aimed to help them directly. It is so sad that businesses that engaged in predatory lending, which is a criminal offense, were not only let off the hook legally but were rewarded with money that was supposed to help those in need. Not only have the banks not used the money for that purpose, but they have also engaged in practices like foreclosing without following the law or protocol. They are also getting away with pre-approving loan modifications, only to cancel them after receiving payments from consumers, which are not reported to credit reporting agencies, thereby destroying consumer credit ratings in the process. The loan-modification process is made even more cumbersome because they continue foreclosing on the property, which adds thousands of dollars in legal fees for those trying to get a loan modification. We won't mention the failure of banks to modify FHA loans, even though they are required by law to do so. It is clear to us that banks cannot be trusted to do what's best for the consumer as it relates to this foreclosure crisis. Yes, many consumers bit off more than they could chew, but many banks sought out these consumers and entered into horrible agreements with the consumers. Our question is, why do banks continue to get away with this type of illegal, unethical and immoral behavior?
Read more at MSNBC.